Help your kids get ahead in life by teaching them the basics of financial responsibility at a young age. It’s never too early to teach them the value of working hard, saving money, and accomplishing goals, and you can use Financial Literacy Month this April as a chance to introduce some of these lessons that will encourage financial literacy for kids.
Here are some ideas and concepts that can help your child become financially literate well before their adult years.
Give them Opportunities to set Goals
When your child shows interest in a toy, event, or something else that costs money, use it as a teaching opportunity. Rather than tell them to add it to their birthday list, or instead of buying it for them, tell them that they can earn it for themselves. Give them age-appropriate tasks that can earn them the money necessary to buy their desired item. This will help them learn responsibility by associating their own efforts with their own rewards.
Obviously, children shouldn’t be completely financially responsible for themselves, and it’s okay to buy them clothing and toys they like, but this doesn’t have to detract from the goals they’ve set. Help them set small, manageable goals for anything extra they would like. Teach them to understand time management by encouraging them to save for an event, like a movie with friends, and talk to them about how they’d feel if they didn’t save the amount they needed in time. This also helps them develop the discipline to put off short-term, smaller purchases in order to have enough for the big purchase ahead.
What you emphasize will show your kids what’s important to you, so it’s important that you celebrate your children when they meet their goals. Show them that financial responsibility is important to you, and that will make it important to them. Praise them excitedly when they accomplish their goal and bring it up often. Help them feel proud, maybe calling grandparents or other family members to share their accomplishment with others. Especially acknowledge their overcoming of obstacles, like saying no to smaller wants to achieve their larger goal, or working extra hard to make up for the difference between what they’d normally earn and what they need.
Once they are confident in themselves from accomplishing their goal, they will feel empowered to set and achieve larger goals.
Age-Appropriate Financial Goals
Here are some suggestions of age-appropriate financial goals you can set with your children.
- Working for a reward: simple chores with direct rewards, like small toys, or a dollar.
- Learning to count money: teach them about currency.
- Learning to save money: teach them to save one dime for every dollar, or one dollar for every ten dollars. Ten percent is an easy amount to calculate.
- Comparison Shopping: ask for their help in finding the lowest price for various items.
- More responsibility for more money: give them larger chores or responsibilities to allow them to earn and manage more money.
- Saving a few months for a purchase: help them choose a larger, more expensive goal for which to save for a longer amount of time.
- Learn the basics of credit: loan them money with interest to solidify the concept of savings and borrowing.
- Connect amount of work needed to earn money for a goal.
- Open checking account: learn to use a debit card and keep track of balances
- Save for college: research the cost of college and set goals to avoid student loans
- Get a job: earn more money and learn to manage it responsibly
- Build a savings fund: learn the importance of an emergency fund and start creating one